The ECE industry in India is still underdeveloped: ECE penetration of the construction industry is relatively low compared to other countries, and there is significant room for growth.

India is often compared with China in context of economic development. Just a few decades ago, the two countries were at similar stages of development and in some areas, India in fact had the edge. But the scorching pace of infrastructure development set by the reformist Chinese regime in the 1980s turned the ruling party’s communist ideology on its head and embraced an aggressive state controlled capitalistic model, unleashing the dragon of development. It is this very rapid infrastructure development that paved the way for the manufacturing revolution in that country and the rest, as the cliché goes, is history.

While the liberalisation of the Indian economy in the 1990s decade did usher in some change, it failed to gather the desired momentum in the absence of a firm political will to drive change. Today, if there is one single factor that could be termed as the major obstacle in the way of the country becoming a manufacturing powerhouse, it is poor infrastructure and thereby lays a huge opportunity.

Boosted by the overall positive trends in the construction and infrastructure industry over the last decade in general, and during the last two years in particular, India’s earthmoving and construction equipment (ECE) industry has had a decent run. According to industry sources, organised construction sector in India, which includes roads and urban infrastructure, accounts for approximately 55 per cent of the ECE industry; mining, irrigation and other infrastructure segments (e.g., power, railways) account for the rest.

The present levels of urban infrastructure are inadequate to meet the demands of the existing urban population. There is need for re-generation of urban areas in existing cities and the creation of new, inclusive smart cities to meet the demands of increasing population and migration from rural to urban areas. Future cities of India will require smart real estate and urban infrastructure. The construction industry in India is enthused by the government initiatives, particularly the 100 Smart Cities and 500 AMRUT (Atal Mission For Rejuvenation & Urban Transformation) Cities, expected to invite an investment of over Rs 2 trillion in the next five years. In addition, Rs 62,009 crore would be invested under Swachh Bharat Mission (SBM) in urban areas.

With demand for iron and steel set to continue, given the strong growth expectations for the residential and commercial building industry, the mining sector too is expecting an upswing. It is estimated that in India there were a total number 3025 operational mines during 2014-2015. The country has the 6th largest iron ore reserve in the world and the 8th largest bauxite ore reserve. India is 4th largest iron ore producer in the world and 5th largest bauxite ore producer in the world.

As for road infrastructure, the transport sector constitutes 6% of the country’s GDP and 70% of the share of the roads sector. The government has launched major initiatives to upgrade and strengthen highways and expressways in the country. The private sector has emerged as a key player in the development of road infrastructure. The value of roadways and bridge infrastructure in India is expected to grow at a CAGR of 17.4% between 2012-17, to reach USD 10 billion.

In 2014, global management consulting firm A T Kearney undertook a study, “Building India’s Earthmoving and Construction Equipment Industry” with the support of the Indian Construction Equipment Manufacturers’ Association (iCEMA). The association is affiliated to the Confederation of Indian Industry (CII) and presently represents 58 leading companies who manufacture, trade and finance a variety of products such as hydraulic excavators, wheel loaders, backhoe loaders, motor graders, vibratory compactors, cranes, dumpers, tippers, forklifts trucks, dozers, pavers, batching plants, diesel engines, etc.

One of the important conclusions of this study is the importance of the ECE industry in India, which is still underdeveloped: ECE penetration of the construction industry is relatively low compared to other countries, and there is significant room for growth. The report noted two primary factors that will help the ECE industry achieve its potential for growth are the increase in demand from end-user industries and higher adoption of ECE in traditional construction applications. There are clear advantages to using ECE versus manual labour and low-end technology for construction applications, and it is important for industry executives to identify and communicate these benefits to customers.

New trends

At Bauma 2016 held in April, billed as the biggest trade show on earth, the mood was positively upbeat. About 580,000 people from 200 countries attended Bauma 2016, cementing its status as the largest trade show in the world. The expo was laid out over three open-air sections and 17 indoor halls. Almost 40 per cent of the exhibits were in the mining segment. Most majors were present, and all global majors in earthmoving, road building, mini-construction equipment, asphalt processing, crushing & screening, concrete, shotcrete, port solutions, cranes, aerial work platforms, hydraulic piling rigs, form work & scaffolding solutions, diesel engines, transmission & components, hydraulics, electronic control systems, telematics solutions, measurement, trailers, special attachments, and spare parts were seen wheeling and dealing with a large number of potential customers.

Shankar Srivastava, Managing Editor, Equipment India, a publication of the ASAPP Info Global Group that owns IPF as well, had a holistic view at Bauma 2016. He observed the following significant and major technology trends:

* Operator lift for tower cranes has been made mandatory in Europe. As a result, all tower crane makers had showcased their versions of operator lifts (both inside and outside the mast section) with black start and regenerative motors, developed jointly with renowned construction hoist manufacturers

* Most new heavy-duty 400 tonne plus lifting capacity mobile cranes by Liebherr, Terex, Manitowoc, Sennebogen, Hitachi and others have presented Taxi Cranes meant for easy transportation to different locations. Many Indian rental companies are excited about procuring this equipment

* In the mining segment, Caterpillar, Komatsu, Liebherr, Hitachi and Terex presented their mining monsters, 700 tonne crawler shovels and rigid dump trucks of 425 tonne payload capacity equipped with telematics and electronically-controlled efficiency features, along with 6-cu m bucket capacity loaders and 1,000 tonne class excavators. Sennebogen in particular exhibited its latest elevated crawler excavators. Herrenknecht, Joy Global and Robbins focused on underground mining solutions

* In the construction equipment (CE) segment, the major focus was on hybrid versions of various equipment, small equipment with attachments and mini-machines with multiple application capabilities. Kramer, a manufacturer of a range of rigid chassis machines and part of the mega Wacker Neuson group, won one of the six innovation awards at Bauma this year. Telematics, efficiency-enhancing modules, stand-on-the-ground maintenance access points and light weighting were at the forefront

* Rubberised and non-metallic crawler tracks, without compromising on the ruggedness and endurance of conventional steel tracks were another mega trend showcased by Prinoth, Terex, Oerlikon and others

* In the engine segment, Cummins, Rolls Royce, Caterpillar, Liebherr, Perkins, Volvo and Komatsu came out with Tier-IV and Tier-V ready engines for CE applications. They offered integrated and small-sized SCR and DPF arrangements to go along with their engines

* In the mini-equipment segment, more than 1,000 options were on offer for compaction, concrete trowelling, concrete cutting, on-site mixing and grouting Innovative concrete boom pumps by Putzmeister, CIFA and Schwing Stetter, up to 67 m high, were most significant. They had in-situ drive motors for boom section movement and access capabilities like a snake

* Integrated panel type form work solutions for construction were one of the mainstays of indoor halls. Majors like Meva, Hunnebeck, Acrow, Peri, Doka and many others showcased lightweight but 5-tonne plus load bearing per square metre solutions, which could be set up by one person equipped with a small hammer. A form work of up to 10 m in height could be set up in a mere 20 minute, and

* Road machinery: all biggies like Wirtgen, Volvo, Fayat Bomag, Marini, Lintec, Atlas Copco, Astec, Ammann, Caterpillar, Doosan, Case, JCB and Titan showcased their latest versions of asphalt plants with RAP capabilities, sensor pavers with advanced paving management systems, heavy and light compactors, motor graders, skid steer loaders, material crushing & screening (mobile and stationary) plants and some allied equipment.

Indian Participation

There were 25 Indian companies including a couple if industry associations at Bauma 2016. The India Day Seminar, held on April 12, received an encouraging response. M Sevala Naik, Consul General India at Munich, said, “We are working closely with VDMA (German Engineering Federation) and invite exhibitors to come to our country and create in India.” Anand Sundaresan, President, iCEMA – Indian Construction Equipment Manufacturers Association – emphasised on manufacturing of components in India and introduction of smaller-sized construction equipment in the country. A panel discussion took place on coal mining and power opportunities in India.

These are the quotes from some of the Indian exhibitors at the show:

“We expect a lot of business at Bauma this year from Asian subcontinent customers.” - Raman Joshi, MD, Manitowoc India

“The first three days at Bauma have been very good. A lot of customers are visiting to see our exhibits, specially the 450 tonne taxi crane, for which we have already secured 30 orders.” - Ajay Kumar Somani Managing Director, Liebherr Cranes, India

“From this Bauma, I can see that the customer footfall has gone up multifold. Bauma 2016 is a big revival since the last two editions. Schwing stands as a company showing our latest technologies developed over the last three years, without bothering about the decline. This shows the commitment of our group for the industry. With appreciation shown by our customers, we are encouraged that we will get business not only in Europe but other markets as well.” - V G Sakthikumar Managing Director, Schwing Stetter Sales & Services India

“First of all, there is a lot of encouragement from iCEMA members, which basically comes from what is happening in India. The road segment has being doing very well. Last year, almost 8,000 km of road projects were awarded; and more is to come. However, smaller-sized equipment will be required to cater to the major developments in the rural and North-east sectors. Our manufacturers are not geared up for these projects. As such, I am advising all our Indian counterparts to use this Bauma to explore such products as the expo has enough to offer.” - Anand Sundaresan, President, iCEMA

“Bauma has provided us a platform to attract customers for our products, from the Middle East, Africa and the Far East.” - J Ramesh, Managing Director, Parijath Machinery (an Indian exhibitor).

Conclusion

In India, the ECE market is expected to grow at a healthy CAGR of 20 to 25 per cent over the next few years, from FY13-14 levels of about 48,000 units. This would bring the market to between $16 billion and $21 billion by 2020, up from today’s $3 billion. During the last two decades, the earthmoving and construction equipment industry has made enormous progress and grown both in size and diversity. Growth in the construction equipment industry in India is linked to the overall level of infrastructure development as well as growth in construction activity. Most global players are now present in India and have aggressive plans for growth, pushing the adoption of new equipment and technologies.